Department of Energy Blocks Arizona Investment That Would Lower Electricity Bills

(PHOENIX – Jan 29, 2026) The Department of Energy announced that it’s cancelling a planned $1.8 billion loan to support clean energy, battery and transmission projects for APS, Arizona’s largest electric utility. The financing was granted in January 2025. APS planned to use the funding to invest in infrastructure technologies to help customers save money on their electricity bills. 

“This cancellation blocks grid upgrades and affordable clean power right as Arizonans’ electricity bills are soaring,” said Ted Kelly, Director and Lead Counsel, U.S. Clean Energy at Environmental Defense Fund. 

“Arizona needs more low-cost power to keep up with its growing economy and rein in rising bills. Instead, the Department of Energy is killing much-needed clean power projects and pouring money into aging coal plants that are expensive, unreliable and dirty.”

Background:

• Arizona Public Service is asking state regulators to approve a 14% rate increase – about $20 per month – to pay for rising electricity demand. Tucson Electric Power is also seeking a 14% increase, which it says would add about $16 per month.
• Arizona utilities estimate significant electricity needs over the next 15 years, largely due to the construction of data centers, with some utilities projecting a 40% increase in peak demand. Arizona Public Service (APS) saw its highest demand ever in August 2025. If every new proposed data center comes online, the electricity demand would be 19,000 megawatts. “We do not have the energy and transmission infrastructure to support the amount of energy that’s being requested of us,” said Patrick Bogle of APS.
• A statewide survey last fall found that nearly two-thirds of Arizonans support building more wind and solar. The survey also found that around 1 in 4 Arizonans are worried about electricity costs.